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WBCS Main Examination 2023 — Paper V: Indian Constitution and Economy · Question 134 of 200

Q134
Indian EconomyMoney, Banking & Financial Institutions
Which of the following is not a function of the Reserve Bank of India?
  1. a.Changing the bank rate.
  2. b.Managing open market operations.
  3. c.Acting as the lender of the last resort to the commercial banks.
  4. d.Taking decision regarding the use of deficit financing to close the gap between revenues and expenditures of the Government.

Answer: (D) Taking decision regarding the use of deficit financing to close the gap between revenues and expenditures of the Government.

Deciding how much deficit financing to use is a fiscal decision taken by the Government in its Budget, not by the RBI. Changing the bank rate, conducting open market operations and acting as lender of last resort are all RBI functions.

Q133 Whole paperQ135